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Climate change, trade top agenda at EU-China summit

A vigorous debate on carbon emissions is expected as European and Chinese leaders meet for a high-level summit in Prague 20 May. Protectionism and the EU's yawning trade deficit with China are also expected to feature high on the agenda.

20 May EU-China summit in Prague is the first since a summit scheduled for 1 December 2008 was abruptly cancelled amid controversy over French President Nicolas Sarkozy's meeting with the Dalai Lama in Gdańsk, Poland, at a gathering of Nobel Peace Prize winners.

Chinese Premier Wen Jiabao came to Brussels earlier this year for a bridge-building tour, during which it was agreed that the summit should be rescheduled.

China's role in global affairs has grown significantly in recent years, as was seen at the April G20 meeting in London, at which the development of a new global financial infrastructure topped the agenda.

Among the most difficult issues for China has been balancing economic development with cutting CO2 emissions. Chinese EU Ambassador Song Zhe has said China is ready to work with the EU on CO2 reduction , but the complex issue remains controversial.

Differing views on how to marry China's rapid industrial development with reducing energy consumption are likely to be at the centre of tensions between leaders at the summit, although Chinese diplomats in Brussels have indicated their willingness to cooperate more closely on CO2 reduction.

Speaking 19 May at a conference on the role of China in a new global order, Ambassador Song Zhe, who heads the Mission of the People's Republic of China to the EU, called for closer coordination to tackle the financial and energy crises.

However, he said China was working on the basis of "common but differentiated responsibilities" for reducing greenhouse emissions.

This principle, which is contained in the Kyoto Protocol, places greater responsibility on industrialised countries such as the US and EU, while making some allowances for the fact that China, India and others are still developing.

The ambassador said developed countries are responsible for the majority of historical greenhouse gas emissions, and China's current per capita emissions are one fifth those of the United States. However, he said China is actively restructuring its national economy and revamping production models in an effort to cut energy consumption. Zhe added that China's response to the crisis shows that it is a nation intent on shouldering responsibility.

Addressing concerns over what kind of world power China will be in the evolving new global order, the ambassador said Beijing does not pose a threat to other nations.

"China was once bullied by foreign powers and therefore knows dearly the humiliation of inequality. China will never bring such agony to others. Nor will it pursue its own development at the expense of others' interest," he said.

"Historically, the rise of global powers has led to tension and conflict. However, history need not repeat itself," she said.

She said the immediate common challenges facing the EU and China are the economic crisis and the environment, calling for a coordinated response to both. She said Europe is sharing know-how on clean coal, carbon capture and storage with China in order to assist its efforts to cut carbon output.

Ferrero-Waldner added that the EU and China have a common interest in resisting protectionism.

The summit comes in a week where new figures reveal a €170 billion trade deficit between the EU and China. Between 2000 and 2008, trade in goods between the two giants tripled in value. All EU countries have a trade deficit with China – meaning they import more than the export – with the Netherlands (€41 billion), the UK (€33 billion) and Italy (€24 billion) recording the highest trade gaps.

Positions:

Speaking at the 'Strategic Dialogue' conference in Brussels, hosted by the Friends of Europe think-tank, Dirk Sterckx MEP, who chairs the European Parliament's delegation for relations with the People's Republic of China, said a new world order will emerge over the next decade.

"In the past, reforms of the financial system have been accompanied by major conflicts; by wars. We want to achieve this new order in an orderly and peaceful way," he said. He said the EU and China are broadly thinking along the same lines, although there are some differences on specific issues.

Bates Gill, director of the Stockholm International Peace Research Institute (SIPRI), said more work is needed in Europe to understand contemporary China. He warned of an "expectations gap" caused by over-optimism about how rapidly change can be achieved in China. He said the growing income gap, environmental issues and social unrest pose major domestic challenges to the Beijing government. Gill also noted that China does not share Europe's view on multilateralism in the international arena.

Jian Yuan, vice-president of the China Institute of International Studies (CIIS), said a close examination of the reforms to international institutions put forward by China shows the potential for consensus on building a new global order.

"China hopes the new system will allow emerging countries have a greater role in the IMF and World Bank," she said, adding that China had also suggested using Special Drawing Rights (SDRs) as a worldwide reserve currency in place of the dollar. SDRs are a basket of major world currencies used in international trade and finance.

James Moran, director for Asia at the European Commission's external relations department, said relations between the EU and China had "expanded and deepened" over the past five years, with increasing tourism, trade and student exchange.

He described the postponement of the 11th EU-China summit last year as "a setback" but noted that the "rhythm of summits was quickly restored" due to the interdependence between the two parties. Moran said he hoped relations would be fully repaired by the time leaders meet in Beijing later this year.

Fraser Cameron, a senior advisor to the European Institute for Asian Studies (EIAS), said Europe should take the lead in scrapping the G8 and change the way leaders of the IMF and World Bank are chosen.

Wang Yiwei of Fujian University said China and the EU are working "more in cooperation than competition" and China can learn much from Europe's social welfare system. "There are many shared values between China and the EU in shaping a new order," he said.

In a statement released ahead of the summit, European Commission President José Manuel Barroso said: "We will continue our open and constructive dialogue, building on the successful visit of Premier Wen to Brussels at the end of January. Both, the EU and China are committed to our comprehensive strategic partnership. At the same time, China is a crucial partner in international efforts to counter global challenges, such as the economic and financial crisis and climate change."

EU Trade Commissioner Catherine Ashton said: "An open and fair environment for trade and investment is vital if we are to recover from this economic crisis. The European Union and China emphasised at our High Level Economic and Trade Dialogue less than two weeks ago that we are working together to keep our markets open and reach a swift conclusion to the Doha Round."

Brussels-based business lobby group BusinessEurope said the summit would be the occasion to continue to improve market access for European businesses and "thus help combat the ever-growing and unsustainable trade balance between these two markets".

A critical barrier to trade remains the insufficient protection of intellectual property rights, the group said in a statement.